WASHINGTON — Lawmakers from both political parties balked after hearing President Obama say he might request even more funding for the Troubled Asset Relief Program.
"It will depend on how powerful a case is made and what the conditions are," Sen. Carl Levin, D-Mich., said in an interview.
Sen. Robert Bennett, R-Utah, the No. 2 GOP member of the Banking Committee, also expressed doubt.
"Unless there is a much more transparent presentation of what happened to the money under Tarp so far and what is happening with respect to money under Tarp 2, it would be difficult to get a Tarp 3 through," he said in an interview.
In particular, Sen. Bennett said he doubted the virtue of the bank stress tests that the Treasury was to launch Feb. 25. (See related
"One implication that I am concerned about is that by subjecting every bank to a stress test, there is the implication that every bank is failing," he said.
During a speech to a joint session of Congress Tuesday night, President Obama said additional funds beyond the $700 billion already allocated may be necessary.
"This plan will require significant resources from the federal government — and yes, probably more than we've already set aside," he said.
A more specific request could come as early as today in the president's budget.
Lawmakers, while not surprised, were adamant that they needed more information on how the administration's programs will work. Though Treasury Secretary Timothy Geithner outlined a plan Feb. 10, lawmakers said they need particulars.
House Financial Services Committee Chairman Barney Frank, in an interview after the speech, hit on the other, big unknown.
"The next step now is for the secretary to formulate his plan for dealing with the toxic assets," the Massachusetts Democrat said.
Rep. Frank said the administration has probably not determined exactly how much more is needed but knows it will have to work hard to persuade Congress.
"They still don't have the votes for the money until they can show that the can follow through," he said. "They've only begun to. The foreclosure piece was important. The crackdown on compensation was important."
Republicans, however, were more skeptical that the administration could prove added funds would help. They said the administration has not provided enough information.
"We've got to see the details," said Sen. Richard Shelby, the top Republican on the Banking Committee. "I think they haven't figured it all out yet."
But the Alabama Republican expressed doubt about a plan to acquire troubled assets and said he opposes yet another government initiative to save Citigroup Inc.
"Citi's been a problem bank for a long time," he said. "It was a problem in the '90s and it grew out of it. I'm a believer in nothing's too big to fail, that they need to close some of these banks; it costs the taxpayers a lot more money to keep them open."
Sen. Bennett said the administration must figure out how to restore market confidence quickly. "When confidence comes back, lending will come back, and when lending comes back, the economy will start to recover," he said. "So the details of the specific programs must all be measured against that yardstick."
But Rep. Maxine Waters, the House Financial Services Committee's housing subcommittee chairwoman, said she thinks President Obama's pitch for more Tarp money could work.
She said he was smart to try to convince the American public that helping banks could benefit them and to promise to tighten oversight of banks that receive money.
"What he tried to do was soften the blow by saying we are going to have some mandates if they take the Tarp money and they are going to have to agree to some things like tough oversight," she said.
Rep. Waters said President Obama also struck a nerve by saying there would be no more jets and lush parties.
But she said his appeal to America's competitiveness hit home.
"What he is doing," she said, "is he's challenging us and he's really pushing at our pride: 'Come on, guys, you going to let somebody beat us? We're competitive. We run the race.' I think he did it all very well."
But some lawmakers said the administration needs to do a better job of knocking down rumors; they noted that speculation about mass nationalization of the banking system has grown during the past few weeks.
"We are hearing talk about nationalizing banks," said Rep. Dennis Moore, D-Kan. "That to me should be an absolute last resort. Talk about going towards socialism. … That is really a huge step in the other direction than what a lot of people in this country want."
